President Clinton's personal lawyer launched a broadside at independent counsel Kenneth W. Starr, charging in a letter released yesterday that Starr cannot "credibly or appropriately" investigate allegations that key Whitewater witness David Hale was paid off by conservative activists.

Lawyer David E. Kendall outlined in detail the independent counsel's links to conservative philanthropist Richard Mellon Scaife, who funded an effort by the American Spectator magazine to uncover negative information about the president. That project was the source of alleged payoffs to Hale while he was a central cooperating witness in Starr's investigation.

Kendall asked Starr to request that the Justice Department  rather than Starr's office  investigate the Hale allegations, which were made by the ex-girlfriend of a longtime Hale friend. "I do not think you or your office can credibly or appropriately conduct this investigation," Kendall wrote to Starr in the five-page letter, dated Friday.

The Justice Department on Thursday urged Starr to investigate the allegations but alerted the independent counsel that he may face a conflict of interest  or the appearance of one  in doing so. The Justice letter, from Deputy Attorney General Eric H. Holder Jr., included a pointed statement that Starr may have such a conflict "because of the importance of Hale to your investigation and because the payments allegedly came from funds provided by Richard Scaife."

Kendall seized on the Holder letter to attack Starr, saying that "quite properly ... the ball is in your court." Kendall's criticism of Starr comes even as the independent counsel is planning to bring a key witness in the Monica S. Lewinsky probe, Clinton secretary Betty Currie, back before the grand jury this week.

Starr's office has not yet decided what it plans to do with the Hale allegations. "We're evaluating what our response will be, and to whom," said a spokesman for the office, adding that a decision is expected soon. Deputy independent counsel Hickman Ewing said last week there is no evidence FBI agents or anyone in Starr's office knew of any money going to Hale.

Hale, an Arkansas businessman, provided testimony that helped bring convictions against Clinton's Whitewater business partners in Starr's most successful prosecution thus far. Under a cooperation agreement with Starr, Hale also has alleged that Clinton was directly involved in a fraudulent loan scheme when he was governor of Arkansas.

In his letter to Starr, Kendall noted that "you have publicly embraced Hale as a model witness" and claimed that "a thorough investigation of the Hale allegations could jeopardize convictions your office has obtained."

FBI agents in Arkansas, following up on media reports regarding the supposed payments to Hale from his longtime friend Parker Dozhier, kicked the matter up to the Department of Justice about two weeks ago after turning up information indicating that Dozhier may have given Hale some money. The alleged sums were small and there is no clear link to the American Spectator, officials familiar with the case said. Nonetheless, the U.S. attorney in Fort Smith decided that the allegations of witness tampering warranted further investigation, according to federal officials.

Once that conclusion was drawn, the case was sent to Washington out of concern that any further investigative steps would intrude on what was potentially independent counsel turf. "The only question was who should take the next step, Justice or the Office of Independent Counsel," said an official involved in the process.

Since Starr explicitly has jurisdiction to investigate any charges of perjury, witness tampering or obstruction arising from his own investigation, it seemed clear that he should investigate the charges, Justice Department officials said.

Kendall said Starr's conflicts include his "well-publicized connections" to Scaife. Scaife is a benefactor of the fledgling public policy school at Pepperdine University, where Starr has accepted a deanship when he completes his investigation. "It is difficult to imagine how you could credibly lead an investigation into possible improper payments from an individual who is helping to finance your future activities," wrote Kendall.

Kendall also cited Starr's friendship with prominent Washington attorney Theodore Olson, who has represented Hale and sits on the American Spectator's board. "You should not conduct an investigation where your own friends are perhaps subjects and certainly key witnesses," Kendall wrote.

Meanwhile, Currie is slated to appear before the grand jury again this week, sources familiar with the matter said. Starr's investigators have been focusing on Currie's retrieval of gifts that Clinton gave Lewinsky when the former White House intern was facing questioning late last year from lawyers for Paula Jones about whether she had a sexual relationship with Clinton.